Dear Reuel

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I have been putting my 3 bedroom condo unit for rent at an asking price of $3,000. I’m willing to negotiate to $2,800 since it was last rented out at $2,800. That’s reasonable right? I have an offer of $2,500 and the tenant can move in by end of the month.

I was told by my agent to consider the offer since the recent transaction is hovering between the $2,300 to $2,600 range due to the weakened rental market. That’s so low! Do you think I should compromise on my asking rent?

– Reasonable Landlord

Hi Reasonable Landlord,

So you have an offer of $2,500 and the tenant can move in at the end of the month.. What are you waiting for?! Take the offer already!

While the property market is beginning to pick up as supply of new launch properties diminishes, the takeup rate in the rental market is slower in response.According to a Singapore Business Review article, private residential vacancy rate stands at 30,100 at the end of Q3 2017.

The root cause is due to the fact that there just aren’t enough Foreign talents coming to S’pore to work. And it isn’t because Singapore is undesirable. Rather, the reason why we are in a pickle is because of us – our dear fellow netizens who complained about having too much Foreign talents in S’pore. Our dear PAP-run Government responded in kind by granting lesser work visas.

Simple economics of supply and demand has it that when demand is not able to meet the supply, prices slide and vice versa. I hope you weren’t one of the netizens because you would have literally sabo yourself. #ownselfsaboownself

Here’s a true story. I had a landlord who wanted to rent a 3 bedroom condo unit in East. The condo is an older condo and requires a ten minutes walk from Tanah Merah MRT. Landlord has previously enjoyed past rentals of around $3,000/month and was determined to keep it that way.

She asked me to assist to rent her property out at $3,000. I explained to her it was difficult since the recent rentals was around $2,600 but advertised at $3,000. After three months of marketing and arranging viewings, I managed to get her an offer from a local tenant family of three, at $2,800.

Guess what? She refused! She insisted that the tenant increase the offer by $50 to make it $2,850. The tenant was unwilling to do so and the deal fell through. And it took another four months before she rented her unit out to a tenant at.. drumroll please… $2,500. *Shakes head*

The opportunity cost was more than seven months loss of rental income. While this is one of the more extreme (true) cases, it can happen to you if you are asking for sky-high prices for your property.

If your property agent convinced you to buy a new property promising high rental returns, chase him or her to rent it out at the promised rental yield.

Your priority is to make sure your unit isn’t vacant, or at least not for too long. Get your unit occupied so you still get rental income coming into to help you shoulder the monthly installments. While you may feel butt-hurt that you couldn’t rent out at the price you wanted, remember – it’s better than having it vacant for months.

But good news, the rental market WILL recover. I quote TODAY Online’s 5 December 2017 article, “Raising the intake of working-age foreigners will help shore up growth and fiscal revenue, and reduce the tax burden on younger Singaporeans”.

It’s only a matter of time before the Government open the floodgates to bring in more foreigners. Soldier on fellow landlords! RW

Editor’s note: Every week, Reuelwrites dishes out uncensored, practical advice to friends, family members or strangers regarding real estate. Got a question for Reuelwrites? Email it to eugenetayhy@gmail.com.

Consultation: There is no one-advice-fits-all solution. For more in-depth advice, contact Reuelwrites at eugenetayhy@gmail.com or call +65 9833-6450.

Disclaimer: While the author Reuelwrites is a certified real estate agent with Huttons Asia, the above thoughts represents his own and is in no way representative to that of Huttons Asia.

“My boyfriend and I are settling down soon and are thinking of applying for a $250k, 3 room BTO flat in Punggol. We are thinking of fully paying the flat with our CPF. What do you think?”

– Girlfriend

Dear Girlfriend,

First of all, congratulations! Oh wait, he hasn’t propose right? Anyways, why are you considering a 3 room flat instead of a 4 room flat? Because it’s cheaper? Please do your family planning before firming up your decision. Unless you are telling me that you heart dogs over babies, then I second your decision!

Next, you will be a fool if you fully pay your flat with your CPF, at your age. Since you are still young and probably won’t stay here forever (you know what I mean), there is a high possibility that you will get promoted and get better salaries, upgrade to a bigger house or better yet – move to a private property.

By dumping all your CPF monies into your flat, you are reducing your opportunity cost to nil. Assuming five years from now, you would like to buy a brand new EC like Rivercove Residences for example but because you are short of the same $250k which you put into your flat, now you are stuck with your 3 room flat. Not very smart, is it?

And worst of all, by the time you want to sell your flat to net a cool $150k cash proceeds, you would realise that your cash proceeds has been reduced by $50k due to the CPF accrued interest which you could have earned have you left them in your CPF account to generate free interest.

Of course there are some exceptions. If you draw a huge salary, and can afford to pay the option and down-payment for a private property regardless of the ABSD, you can keep your fully paid flat and buy a condo on top of your flat. By the way, I would like to be your friend (and maybe entice you with some properties I am promoting).

But if you don’t fall within the above category, do me a favour dear. Take a maximum bank loan (pay 5$ option in cash), and keep your CPF monies in the CPF Ordinary Account. Let them earn the 2.5% accrued interest, or invest them in some unit trust or whatever. Just don’t be silly to put all your CPF monies in your flat immediately. RW

Update: The above scenario is on the assumption that the buyer has the ability to fully pay the flat with their CPF monies or has accumulated more CPF monies through years of work while already owning a HDB flat. For buyers buying with HDB loan, they will have to use all their monies in their CPA OA to offset the purchase price before taking a HDB loan.

Editor’s note: Every week, Reuelwrites dishes out uncensored, practical advice to friends, family members or strangers regarding real estate. Got a question for Reuelwrites? Email it to eugenetayhy@gmail.com.

Consultation: There is no one-advice-fits-all solution. For more in-depth advice, contact Reuelwrites at eugenetayhy@gmail.com or call +65 9833-6450.

Disclaimer: While the author Reuelwrites is a certified real estate agent with Huttons Asia, the above thoughts represents his own and is in no way representative to that of Huttons Asia.